CHAPTER 4. FUND MEMBERSHIP; EMPLOYEE CONTRIBUTIONS; CREDITABLE SERVICE; PURCHASE OF SERVICE; FUND WITHDRAWAL
IC 5-10.4-4
Chapter 4. Fund Membership; Employee Contributions;Creditable Service; Purchase of Service; Fund Withdrawal
IC 5-10.4-4-1
Membership
Sec. 1. (a) The members of the fund include:
(1) legally qualified and regularly employed teachers in thepublic schools;
(2) persons employed by a governing body, who were qualifiedbefore their election or appointment;
(3) legally qualified and regularly employed teachers at BallState University, Indiana State University, University ofSouthern Indiana, and Vincennes University;
(4) legally qualified and regularly employed teachers in a stateeducational institution whose teachers devote their entire timeto teaching;
(5) legally qualified and regularly employed teachers in statebenevolent, charitable, or correctional institutions;
(6) legally qualified and regularly employed teachers in anexperimental school in a state university who teach elementaryor high school students;
(7) as determined by the board, certain instructors serving in astate educational institution extension division not covered bya state retirement law;
(8) employees and officers of the department of education andof the fund who were qualified before their election orappointment;
(9) a person who:
(A) is employed as a nurse appointed under IC 20-34-3-6 bya school corporation located in a city having a population ofmore than ninety thousand (90,000) but less than onehundred five thousand (105,000); and
(B) participated in the fund before December 31, 1991, inthe position described in clause (A); and
(10) persons who are employed by the fund.
(b) Teachers in any state institution who accept the benefits of astate supported retirement benefit system comparable to the fund'sbenefits may not come under the fund unless permitted by law or therules of the board.
(c) The members of the fund do not include substitute teacherswho have not obtained an associate degree or a baccalaureate degree.
As added by P.L.2-2006, SEC.28. Amended by P.L.2-2007, SEC.95.
IC 5-10.4-4-2
Creditable service
Sec. 2. (a) Creditable service is determined under IC 5-10.2-3-1and this chapter.
(b) A member, whether or not the member is employed under acontract, must serve at least: (1) one hundred twenty (120) days in a year; or
(2) sixty (60) days in each of two (2) years;
to receive one (1) year of service credit in the fund.
(c) Except as otherwise specified, a member may not be grantedmore than one (1) year of credit for service in a calendar year orfiscal year.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-4-3
Creditable service earned under prior law
Sec. 3. (a) Except as provided in subsection (b), a member whoserved the public schools in a capacity that subsequently wasdesignated by the state as a service for which a license is specified,is eligible to receive service credit for the total length of that service.
(b) A member whose service was recognized as creditable onMarch 11, 1953, may receive for prior uncredited years served in thesame capacity service credit that is not more than the minimumnumber of years required for a retirement benefit.
(c) If a person presents a claim for prior service in the formestablished by the board, the board shall issue to the person acertificate of the amount of prior service allowed by the board.
(d) A member may waive the member's rights to prior service,only if the waiver is made at the time of transfer to the fund.
(e) A member shall retain all service credit earned under the lawbefore July 1, 1975.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-4-4
Out-of-state service
Sec. 4. (a) As used in this section, "out-of-state service" meansservice in any state in a comparable position that would be creditableservice if performed in Indiana. The term includes comparableservice performed:
(1) on a United States military installation;
(2) in a federal prison; or
(3) at an educational facility operated or supervised by theBureau of Indian Affairs.
(b) In computing the service credit for a member who beganteaching in Indiana before July 1, 1981, and who has served as apublic school teacher out of state, the board may include the greaterof:
(1) eight (8) years of out-of-state service rendered before July1, 1981; or
(2) one (1) year of out-of-state service rendered before July 1,1981, for every four (4) years of in-state service.
(c) In addition, a member may purchase out-of-state service creditthat has not been claimed under subsection (b) subject to thelimitations of subsections (d) and (e) if the member satisfies thefollowing requirements:
(1) The member has at least one (1) year of creditable service
in the fund.
(2) Before the member retires, the member makes contributionsto the fund that meet the following requirements:
(A) The contributions are equal to the product of thefollowing:
(i) For service credit purchased before January 1, 1994,the member's salary when the member first became amember of the fund. For service credit purchased afterDecember 31, 1993, the member's salary at the time themember actually makes a contribution for the servicecredit.
(ii) For service credit purchased before January 1, 1994,normal cost, as determined by the actuary of the fund. Forpurposes of this section, "normal cost" means the value ofthe annual amount required to fund the prospectivebenefits promised an employee for the work the employeehas performed. For service credit purchased afterDecember 31, 1993, a percentage rate, as determined bythe actuary of the fund, based on the age of the member atthe time the member actually makes a contribution forservice credit and computed to result in a contributionamount that approximates the actuarial present value ofthe benefit attributable to the service credit purchased.
(iii) The number of years of out-of-state service themember intends to purchase.
(B) The contributions are for any accrued interest, at a ratedetermined by the actuary for the fund, for the period fromthe member's initial membership in the fund to the datepayment is made by the member.
(3) The member has received verification from the fund that theout-of-state service is, as of that date, valid.
(d) Out-of-state years that qualify a member for retirement in anout-of-state system or in a federal retirement system may not begranted under this section.
(e) After April 1, 1965, at least ten (10) years of in-state serviceis required before a member may claim any out-of-state servicecredits.
(f) A member who:
(1) terminates employment before satisfying the eligibilityrequirements necessary to receive a monthly allowance; or
(2) receives a monthly allowance for the same service fromanother tax supported public employee retirement plan otherthan under the federal Social Security Act;
may withdraw the personal contributions made under thecontributory plan plus accumulated interest after submitting aproperly completed application for a refund to the fund.
(g) The following apply to the purchase of service credit underthis section after July 1, 1998:
(1) The board may allow a member to make periodic paymentsof the contributions required for the purchase of the service
credit. The board shall determine the length of the period duringwhich the payments must be made.
(2) The board may deny an application for the purchase ofservice credit if the purchase would exceed the limitationsunder Section 415 of the Internal Revenue Code.
(3) A member may not claim the service credit for purposes ofdetermining eligibility or computing benefits unless the memberhas made all payments required for the purchase of the servicecredit.
(h) Contributions received after July 1, 1993, for the purchase ofservice credit under this section must be applied against the unfundedaccrued liability of the fund.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-4-5
Private teaching service
Sec. 5. (a) As used in this section, "private teaching service"means service in Indiana as a teacher in a private school,kindergarten through postsecondary, that would be creditable serviceif performed in an accredited public school in Indiana.
(b) A member may purchase private teaching service creditsubject to the following:
(1) The member must have at least one (1) year of creditedservice in the fund.
(2) The member must have at least ten (10) years of in-statecredited service before the member may claim the servicecredit.
(3) Before the member retires, the member must makecontributions to the fund:
(A) that are equal to the product of:
(i) the member's salary at the time the member actuallymakes a contribution for the service credit;
(ii) a percentage rate, as determined by the actuary of thefund, based on the age of the member at the time themember makes a contribution for service credit andcomputed to result in a contribution amount thatapproximates the actuarial present value of the benefitattributable to the service credit purchased; and
(iii) the number of years of private teaching service themember intends to purchase; and
(B) for any accrued interest, at a rate determined by theactuary of the fund, for the period from the member's initialmembership in the fund to the date payment is made by themember.
(4) The fund must receive verification from the private schoolthat the private teaching service occurred.
(c) Service for years of private teaching that qualify a member forretirement in an out-of-state system, a private retirement system, ora federal retirement system may not be granted under this section.
(d) A member who: (1) terminates employment before satisfying the eligibilityrequirements necessary to receive a monthly allowance; or
(2) receives a monthly allowance for the same service fromanother tax supported public employee retirement plan otherthan under the federal Social Security Act;
may withdraw the personal contributions made under thecontributory plan plus accumulated interest after submitting to thefund a properly completed application for a refund.
(e) The following apply to the purchase of service credit underthis section:
(1) The board may allow a member to make periodic paymentsof the contributions required for the purchase of the servicecredit. The board shall determine the length of the period duringwhich the payments must be made.
(2) The board may deny an application for the purchase ofservice credit if the purchase would exceed the limitationsunder Section 415 of the Internal Revenue Code.
(3) A member may not claim the service credit for purposes ofdetermining eligibility or computing benefits unless the memberhas made all payments required for the purchase of the servicecredit.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-4-6
Substitute teaching service
Sec. 6. (a) As used in this section, "substitute teaching service"means service in Indiana as a substitute teacher that is not coveredunder section 1(c) of this chapter but is served by a person who hasother service that is covered under section 1(a) of this chapter.
(b) A member may purchase substitute teaching service if:
(1) the member has at least one (1) year of creditable service inthe fund;
(2) before the member retires, the member makes contributionsto the fund:
(A) that are equal to the product of:
(i) the member's salary at the time the member actuallymakes a contribution for the service credit;
(ii) a percentage rate, as determined by the actuary of thefund, based on the age of the member at the time themember makes a contribution for service credit andcomputed to result in a contribution amount thatapproximates the actuarial present value of the benefitattributable to the service credit purchased; and
(iii) the number of years of substitute teaching service themember intends to purchase; and
(B) for any accrued interest, at a rate determined by theactuary of the fund, for the period from the member's initialmembership in the fund to the date payment is made by themember; and
(3) the fund receives verification from the school corporation
that the substitute teaching service occurred.
(c) Service for years of substitute teaching that qualify a memberfor retirement in an out-of-state system or in a federal retirementsystem may not be granted under this section.
(d) A member who:
(1) terminates employment before satisfying the eligibilityrequirements necessary to receive a monthly allowance; or
(2) receives a monthly allowance for the same service fromanother tax supported public employee retirement plan otherthan under the federal Social Security Act;
may withdraw the personal contributions made under thecontributory plan plus accumulated interest after submitting to thefund a properly completed application for a refund.
(e) The following apply to the purchase of service credit underthis section:
(1) The board may allow a member to make periodic paymentsof the contributions required for the purchase of the servicecredit. The board shall determine the length of the period duringwhich the payments must be made.
(2) The board may deny an application for the purchase ofservice credit if the purchase would exceed the limitationsunder Section 415 of the Internal Revenue Code.
(3) A member may not claim the service credit for purposes ofdetermining eligibility or computing benefits unless the memberhas made all payments required for the purchase of the servicecredit.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-4-7
Leaves of absence
Sec. 7. (a) Except as provided in section 8 of this chapter, amember may be given credit for leaves of absence for study,professional improvement, and temporary disability if the leavecredit does not exceed one-seventh (1/7) of the total years of serviceclaimed for retirement (referred to as the one-seventh rule). Amember granted a leave in these instances for exchange teaching andfor other educational employment approved individually by the boardis considered a teacher and is entitled to the benefits of the fund if foror during the leave the member pays into the fund the member'scontributions. A leave for other educational employment is notsubject to the one-seventh rule.
(b) In each case of a teacher requesting a leave of absence to workin a federally supported educational project, the board mustdetermine that the project is educational in nature and serves statecitizens who might otherwise be served by the public schools or stateeducational institutions. The board shall make this determination fora one (1) year period, which is later subject to review and reapproval.
(c) Subject to this chapter, leaves of absence specified inIC 20-28-10-1, IC 20-28-10-2, IC 20-28-10-3, or IC 20-28-10-4 andadoption leave of not more than one (1) year must be credited to
retirement.
(d) Notwithstanding any law, this section must be administered ina manner consistent with the federal Family and Medical Leave Actof 1993 (29 U.S.C. 2601 et seq.). A member on a leave of absencethat qualifies for the benefits and protections afforded by the Familyand Medical Leave Act is entitled to receive credit for vesting andeligibility purposes to the extent required by the Family and MedicalLeave Act but is not entitled to receive credit for service for benefitpurposes unless the leave is described in subsection (a), (b), or (c).
As added by P.L.2-2006, SEC.28. Amended by P.L.2-2007, SEC.96.
IC 5-10.4-4-8
Military service credit; teachers; college teacher education;employees at state institutions of higher learning
Sec. 8. (a) This subsection applies to a member who retires beforeJuly 1, 1980. A member who had completed four (4) years ofapproved college teacher education before voluntary or involuntaryinduction into the military services is entitled to credit for thatservice as if the member had begun teaching before the induction. Amember who serves in military service is considered a teacher and isentitled to the benefits of the fund if before or during the leave ofabsence the member pays into the fund the member's contributions.Time served by a member in military service for the duration of thehostilities or for the length of active service in the hostilities and thenecessary demobilization time after the hostilities is not subject tothe one-seventh rule set forth in section 7 of this chapter.
(b) This subsection applies to a member who retires after June 30,1980. A member who completed four (4) years of approved collegeteacher education before voluntary or involuntary induction intomilitary service is entitled to credit for the member's active militaryservice as if the member had begun teaching before the induction. Amember who serves in military service is considered a teacher and isentitled to the benefits of the fund if the following conditions aremet:
(1) The member has an honorable discharge.
(2) Except as provided in subsection (g), the member returns toactive teaching service not later than twenty-four (24) monthsafter the completion of active military service.
(3) The member has at least ten (10) years of in-state servicecredit.
The time served by a member in military service for the duration ofthe hostilities or for the length of active service in the hostilities andthe necessary demobilization time after the hostilities is not subjectto the one-seventh rule set forth in section 7 of this chapter.However, not more than six (6) years of military service credit maybe granted under this subsection.
(c) This subsection applies to a member who retires after May 1,1989. A member who had begun but had not completed four (4)years of approved college teacher education before voluntary orinvoluntary induction into the military services is entitled to service
credit in an amount equal to the duration of the member's activemilitary service if the following conditions are met:
(1) The member has an honorable discharge.
(2) Except as provided in subsection (g), the member returns toa four (4) year approved college teacher training program notlater than twenty-four (24) months after the completion ofactive military service and subsequently completes thatprogram.
(3) The member has at least ten (10) years of in-state servicecredit.
The time served by a member in active military service for the lengthof active service in the hostilities and the necessary demobilizationis not subject to the one-seventh rule set forth in section 7 of thischapter. However, not more than six (6) years of military servicecredit may be granted under this subsection.
(d) This subsection applies to a member who retires after May 1,1991, and who is employed at a state educational institution. Amember who had begun but had not completed baccalaureate orpost-baccalaureate education before voluntary or involuntaryinduction into military service is entitled to the member's activemilitary service credit for the member's active military service in anamount equal to the duration of the member's military service if thefollowing conditions are met:
(1) The member received an honorable discharge.
(2) Except as provided in subsection (g), the member returns tobaccalaureate or post-baccalaureate education not later thantwenty-four (24) months after completion of active militaryservice and subsequently completes that education.
(3) The member has at least ten (10) years of in-state servicecredit.
The time served by a member in active military service for the lengthof active service in the hostilities and the necessary demobilizationis not subject to the one-seventh rule set forth in section 7 of thischapter. However, not more than six (6) years of military servicecredit may be granted under this subsection.
(e) For purposes of this section, a member returns to activeteaching service on the earlier of:
(1) the date on which the member signs a teacher's contract; or
(2) the date on which the member is first employed in a positioncovered by this article.
(f) For purposes of this section, a member returns to:
(1) a teacher training program; or
(2) baccalaureate or post-baccalaureate education;
on the date the member registers for or enrolls in classes that themember attends.
(g) The board shall extend the twenty-four (24) month deadlinecontained in subsection (b)(2), (c)(2), or (d)(2) if the boarddetermines that an illness, an injury, or a disability related to themember's military service prevented the member from returning toactive teaching service or to a teacher education program not later
than twenty-four (24) months after the member's discharge frommilitary service. However, the board may not extend the deadlinebeyond forty-eight (48) months after the member's discharge.
(h) If a member retires and the board subsequently determines thatthe member is entitled to additional service credit due to theextension of a deadline under subsection (g), the board shallrecompute the member's benefit. However, the additional servicecredit may be used only in the computation of benefits to be paidafter the date of the board's determination, and the member is notentitled to a recomputation of benefits received before the date of theboard's determination.
(i) Notwithstanding any provision of this section, a member isentitled to military service credit and benefits in the amount and tothe extent required by the federal Uniformed Services Employmentand Reemployment Rights Act (38 U.S.C. 4301 et seq.), including alllater amendments.
(j) Subject to this section, an active member may purchase notmore than two (2) years of service credit for the member's service onactive duty in the armed services if the member meets the followingconditions:
(1) The member has at least one (1) year of credited service inthe fund.
(2) The member serves on active duty in the armed services ofthe United States for at least six (6) months.
(3) The member receives an honorable discharge from thearmed services.
(4) Before the member retires, the member makes contributionsto the fund as follows:
(A) Contributions that are equal to the product of:
(i) the member's salary at the time the member actuallymakes a contribution for the service credit;
(ii) a rate, determined by the actuary of the fund, that isbased on the age of the member at the time the memberactually makes a contribution for service credit andcomputed to result in a contribution amount thatapproximates the actuarial present value of the benefitattributable to the service credit purchased; and
(iii) the number of years of service credit the memberintends to purchase.
(B) Contributions for any accrued interest, at a ratedetermined by the actuary of the fund, for the period fromthe member's initial membership in the fund to the datepayment is made by the member.
However, a member is entitled to purchase service credit under thissubsection only to the extent that service credit is not granted for thattime under another provision of this section. At least ten (10) yearsof service in Indiana is required before a member may receive abenefit based on service credits purchased under this section. Amember who terminates employment before satisfying the eligibilityrequirements necessary to receive a monthly allowance or receives
a monthly allowance for the same service from another tax supportedpublic employee retirement plan other than under the federal SocialSecurity Act may withdraw the purchase amount plus accumulatedinterest after submitting a properly completed application for arefund to the fund.
(k) The following apply to the purchase of service credit undersubsection (j):
(1) The board may allow a member to make periodic paymentsof the contributions required for the purchase of the servicecredit. The board shall determine the length of the period duringwhich the payments must be made.
(2) The board may deny an application for the purchase ofservice credit if the purchase would exceed the limitationsunder Section 415 of the Internal Revenue Code.
(3) A member may not claim the service credit for purposes ofdetermining eligibility or computing benefits unless the memberhas made all payments required for the purchase of the servicecredit.
(l) This subsection applies to a member who retires after June 30,2006. A member may not receive credit under this section for servicefor which the member receives service credit under the terms of amilitary or another governmental retirement plan.
As added by P.L.2-2006, SEC.28. Amended by P.L.119-2006, SEC.3;P.L.2-2007, SEC.97; P.L.201-2007, SEC.1; P.L.115-2009, SEC.15.
IC 5-10.4-4-9
Computation of state liability
Sec. 9. The board shall determine the actuarial liability resultingfrom the years of service of the members in the fund and shalldetermine the state's share of the liability. The board shall distributethe payment of this liability over a period of years that will beequitable to the state and the fund.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-4-10
Designation of beneficiary; allocation of benefits
Sec. 10. (a) The director shall obtain a designation of beneficiaryas soon as possible from each member.
(b) The board may adopt rules to allow a member who designatesmore than one (1) beneficiary to allocate benefit shares in percentageincrements.
(c) Notwithstanding a contrary collateral agreement, court order,process, attachment, or levy, the right to receive a death benefitunder IC 5-10.2 or this article vests with the designated beneficiaryon file with the fund at the time of the member's death. The fundshall distribute the death benefit to the designated beneficiary or thedesignated beneficiary's estate in accordance with IC 5-10.2 and thisarticle.
As added by P.L.2-2006, SEC.28. Amended by P.L.115-2009,SEC.16; P.L.99-2010, SEC.7.
IC 5-10.4-4-11
Member contributions to fund
Sec. 11. (a) This section does not apply to a member who isreemployed more than thirty (30) days after the member's retirementin a position covered by the fund.
(b) Each member shall contribute to the fund three percent (3%)of the member's compensation as set forth in IC 5-10.2-3. However,the member's employer may pay the contribution on behalf of themember.
(c) If a member's employer elects to pay the members'contributions for its employees, the employer must initiate thepayments as part of salary and fringe benefit adjustments providedto these employees.
As added by P.L.2-2006, SEC.28. Amended by P.L.72-2007, SEC.8;P.L.76-2008, SEC.5.
IC 5-10.4-4-12
Cash rollover contributions
Sec. 12. (a) The fund may accept cash rollover contributions froma member who is making payments for additional service creditsunder this chapter if the following conditions are met:
(1) The rollover contribution must represent:
(A) all or a part of the member's interest in a retirement planof a former employer that is qualified under Section 401(a)of the Internal Revenue Code and that permits the interest tobe transferred to the fund as a qualifying rollovercontribution under the Internal Revenue Code;
(B) all or a part of the member's interest from an individualretirement account or annuity described in Section 408(a) orSection 408(b) of the Internal Revenue Code;
(C) all or a part of the member's interest in:
(i) a qualified plan described in Section 403(a) of theInternal Revenue Code; or
(ii) an annuity contract or account described in Section403(b) of the Internal Revenue Code; or
(D) all or a part of the member's interest in an eligible planthat is maintained by a state, a political subdivision of astate, or an agency or instrumentality of a state or politicalsubdivision of a state under Section 457(b) of the InternalRevenue Code.
(2) The amount of the rollover contributions may not exceed theamount of payment required to purchase the service creditsunder this chapter.
(3) The rollover contributions may contain only tax deferredcontributions and earnings on the contributions and may notinclude any posttax contributions.
(4) The member must be otherwise eligible to purchase theservice credit under this chapter.
(b) To the extent permitted by the Internal Revenue Code and theapplicable regulations, the fund may accept, on behalf of a member
who is purchasing permissive service credit under this chapter, atrustee to trustee transfer from:
(1) an annuity contract or account described in Section 403(b)of the Internal Revenue Code; or
(2) an eligible deferred compensation plan under Section 457(b)of the Internal Revenue Code.
(c) The fund, the board, and their respective members, officers,and employees do not have any responsibility or liability with respectto the federal and state income tax consequences of any transfermade to the fund under this section. The board may require, as acondition to the fund's acceptance of a rollover contribution:
(1) satisfactory evidence that the proposed transfer is aqualifying rollover contribution under the Internal RevenueCode; and
(2) reasonable releases or indemnifications from the memberagainst any liabilities that may be connected with the transfer.
(d) Cash transferred to the fund as a rollover contribution shall bedeposited in the retirement allowance account in the pre-1996account or the 1996 account, whichever is appropriate.
(e) A member who terminates employment before satisfying theeligibility requirements necessary for a pension or disability benefitmay withdraw the member's rollover contribution, plus accumulatedinterest, after submitting a properly completed application for arefund to the fund. However, the member must also apply for arefund of the member's entire annuity savings account underIC 5-10.2-3 to be eligible for a refund of the member's rolloveramount.
(f) Except as provided in this section, the fund shall not acceptany other rollover contributions from a member.
(g) The board shall administer this section in accordance with therollover provisions of the Internal Revenue Code and any applicableregulations.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-4-13
Withdrawal provisions
Sec. 13. A member who suspends membership is subject to thewithdrawal provisions of IC 5-10.2-3.
As added by P.L.2-2006, SEC.28.
IC 5-10.4-4-14
Service not related to governmental unit; contribution of employershare
Sec. 14. (a) After December 31, 1994, creditable service does notaccrue under:
(1) this chapter;
(2) IC 5-10.2-3-1;
(3) IC 20-28-10-1;
(4) IC 20-28-10-2;
(5) IC 20-28-10-3; or (6) any other law concerning the fund for leave for othereducational employment;
unless the creditable service is directly related to a governmental unitunder Section 414(d) of the Internal Revenue Code (as defined inIC 5-10.2-1-3.5).
(b) After June 30, 1995, for members receiving credit for leave forother educational employment under section 7 of this chapter orsubsection (a), the board shall assess an actuarially determinedemployer share amount against the appropriate entity to be paid tothe state general fund.
As added by P.L.2-2006, SEC.28.